ACE alerts Trump Administration and Congress economic stimulus will be needed amid COVID-19 market fallout
Posted on 03/18/2020
Sioux Falls, SD (March 18, 2020) – As the coronavirus (COVID-19) spreads across the U.S., threatening American lives and adversely impacting the nation’s economy, the transportation fuel sector will be especially hard hit. Declines in consumer gasoline use will shrink demand for corn ethanol. In response to the economic turmoil being felt by its members, the American Coalition for Ethanol (ACE) CEO Brian Jennings released the following statement:
“As Americans do their part to minimize activities and slow the coronavirus’ spread, it creates yet another headwind for ACE members already harmed by trade wars and EPA’s abuse of small refinery exemptions under the Renewable Fuel Standard (RFS). While the Trump Administration was quick to buoy Big Oil by pledging federal purchases to fill the Strategic Petroleum Reserve (SPR), the President and Congress will also need to take action to help ethanol producers, and the farmers supplying them corn, who are suffering a proportional economic disaster.
“Preliminary economic forecasts estimate the lack of gasoline consumption caused by the coronavirus will likely reduce ethanol demand by hundreds of millions of gallons and cut corn grind by hundreds of millions of bushels. Demand destruction could be on steroids for several weeks, taking money from the pockets of farmers and ethanol producers who are already suffering from trade wars and mismanagement of the RFS.
“As a first step, the Administration should announce it will comply with the Tenth Circuit’s ruling limiting small refinery exemptions, which benefit oil companies at the expense of farmers and rural Americans, and apply the court’s decision nationally to end the misuse of the RFS. Additionally, EPA should at long last restore 500 million gallons to the RFS in compliance with the 2017 DC Circuit Court case regarding the improper use of EPA’s waiver authority.
“Further, with China releasing its list of U.S. companies eligible to export DDGs earlier this week, the Administration must push to reduce or remove Chinese tariffs to make that huge potential export market a reality. Ethanol producers have diversified over the past several years, enabling them to adjust operations and increase co-product output in response to market signals. Now more than ever we need to sell ethanol and DDGs into all domestic and foreign markets.
“These are first steps. ACE will be actively discussing additional actions that can be deployed both in the near- and long-term to mitigate the staggering and potentially unprecedented impact coronavirus will have on ethanol demand. Whether that be new policies to spur the use of low carbon fuels or additional emergency authorities the Administration or Congress could implement, ACE will be providing decisionmakers in the nation’s capital with economic stimulus recommendations.”